On Thursday afternoon, Demis Hassabis celebrated a milestone for Google’s AI efforts: Gemini 4 Carbon, a new large language model that is currently available only to cyber defenders, topped Artificial Analysis’ Intelligence Index.
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that → celebrate → Index
After a series of delays in new model releases and a growing perception that the company is falling off the frontier, early signs suggest that Carbon marks a return to form.
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Carbon → grow → form
For Alphabet’s chief scientist, the news surely felt like a vindication.
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news → feel → vindication
On the same day, Google’s parent company had its worst day in history as a public company.
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company → have → company
Alphabet’s stock fell 12.6 percent, erasing around $500 billion in market value.
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stock → fall → value
The loss marked the second-biggest stock market plunge ever, following Nvidia’s $593 billion slide in January 2025.
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loss → mark → January
Most of the selloff came from investor worries about the huge scale of Google’s AI infrastructure buildout.
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Most → come → buildout
The company plans to spend up to $205 billion on capital expenses this year, and has promised to spend even more in 2027.
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company → plan → 2027
And it reported free cash flow of negative $9 billion — an acceleration of a decline that began the previous quarter.
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that → report → decline
Ordinarily I don’t pay much attention to one-day dips in a stock price, no matter how large.
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I → pay → price
(Nvidia stock now trades more than 10 percent above where it did in January.)
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it → trade → January
But on an earnings call, Google’s chief business officer offered a newsworthy answer to an analyst who questioned why the company’s search revenue growth was slowing despite the fact that queries are increasing.
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queries → offer → fact
Among the reasons, said Philipp Schindler, is that increased usage of Google’s AI Mode is hurting the company because it makes less money than traditional search.
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it → say → search
Then, a few hours later, Reddit reported its own earnings for the quarter — and saw its own stock drop 15 percent.
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stock → report → quarter
The company noted that its traffic from search had fallen meaningfully, and that by the fourth quarter daily users might decline by a low double-digit percentage.
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users → note → percentage
As a result, Reddit CEO Steve Huffman said in a shareholder letter, the company would increasingly push users to log in to use the site.
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company → say → site
After decades of letting people (and bots) browse the site for free, they would now have to create accounts.
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they → let → accounts
“It is better for our business because we will have more signals for ads targeting, and being logged-in leads to higher engagement generally,” Huffman said.
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Huffman → have → engagement
“It also allows us to protect access to Reddit’s extremely valuable corpus of data, and helps us better adapt to emerging regulations around the world.”
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us → allow → world
Google has long pushed back against claims that AI answers are bad for the web by saying that they encourage people to conduct deeper, more expansive searches that result in higher-quality clicks to websites.
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that → push → websites
Today’s news suggests that narrative is falling apart: advertisers are getting less from AI Mode than they get from traditional search, and so is a big publisher like Reddit.
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publisher → suggest → Reddit
But while it’s tempting to accuse Google of a strategic misstep here, in the end I suspect it will come out ahead.
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it → ’ → end
And while the web and its publishers will continue to struggle, Google will mostly be able to dismiss that as someone else’s problem.
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Google → continue → problem
By now most of you are familiar with the changing bargain Google has made with the internet.
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Google → change → internet
In the old days, publishers let Google index their pages, and Google sent them a flood of traffic in return.
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Google → let → return
Google profited hugely from the ads it embedded in search results, and publishers enjoyed smaller profits from the people who visited their pages.
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who → profit → pages
(Last year the US government won an antitrust lawsuit finding that Google had used its position to create an illegal monopoly in the ad market, but in the American fashion, the company’s monopoly power was left almost entirely intact.)
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power → win → fashion
Reddit has been a top beneficiary of the traffic that Google can send.
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Google → send → that
As much of the web became overtaken by slop, human-written conversations became more valuable, and Google began highlighting forum discussions in search results.
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Google → overtake → results
Reddit’s search traffic surged accordingly, and after the company belatedly shut off access to its forums to the bots that relentlessly scraped it, Google reportedly paid $60 million a year to license the data.
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Google → surge → data
But by the time ChatGPT became a blockbuster hit in 2022, Google had already spent many years working to keep users on its own pages for longer.
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Google → become → pages
What began as a jumping-off point to the wider web over time became a place where you could find your answers directly on the search results page.
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you → begin → page
There would be no hugely profitable arbitrages like “what time is the super bowl” available to publishers; Google would answer your question itself.
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Google → answer → question
The first time I used ChatGPT, it seemed obvious to me that the answers improved significantly on a wide variety of Google searches.
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answers → use → searches
Google was always going to have to respond, and it did, with AI Overviews and AI Mode.
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it → go → Overviews
Overviews are those boxes that show up on top of traditional search; AI Mode is a separate interface that you can access from the overviews.
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you → show → overviews
In any case, a year ago Google executives were saying that overviews monetized about as well as traditional search; one reason so many took notice of today’s news is the suggestion that AI Mode — which clearly seems to represent the future of search across many valuable categories — did not.
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which → say → categories
To be clear, Google search is still a monster business: its revenue from search and related ads grew 12 percent, to $63.35 billion.
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revenue → grow → billion
It was essentially flat compared with the previous quarter, despite the fact that AI Mode now has about 1 billion monthly users, and AI Overviews about 2.5 billion.
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Mode → compare → billion
(Schindler didn't say how much less AI Mode earns, or what exactly he was comparing it to.)
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he → say → it
…and 72 more, not listed.
The Aporia
